UK supermarket operator Sainsbury’s is to add a new discount range to its Jeff & Co clothing line.
Jeff & Co Essentials are set for launch in 17 Sainsbury’s stores from next month. The line is “competitively priced,” the company said, with a three-pack of T-shirts costing at £12 (US$17.5) and shirts starting at £6. Chino trousers are priced at £14.
The group is trying to rival Asda, the Wal-Mart subsidiary that has been extremely successful with its George clothing range, which has captured a 16% share of the value clothing market since it was launched ten years ago.
Sainsbury will announce the plans for the new clothing range on Wednesday, when it announces its full-year results. Analysts are forecasting pre-tax profits of £625m, up from £545m last year. They are keen to see the fruits of the labour of Sir Peter Davis, the chief executive brought in to turn around the group following the exit of Dino Adriano.
A 50% rise in Sainsbury’s share price over the past two years has inspired confidence, but analysts now want to see a strong improvement in cost savings and profits.
“Sales are good, but they have to lead to profits. Davis is asking investors to gamble on investment today paying off in 2003 and 2004,” says one City analyst. While profit margins have held steady at 6% at Tesco, they fell to 3.36% at Sainsbury last year, down from 5.52% in 1999.
The group has been put on the back foot in recent months by news that Asda has grown its share of the UK supermarket sector, and could soon overtake Sainsbury’s second place, behind runaway leader Tesco.
As well as the new clothing line, Davis is expected to announce on Wednesday plans to resurrect the SavaCentre format, in a bid to appeal to a broader consumer base than the group’s perceived core of middle-class shoppers.